GA Management Organizations Profiteering via Non-Profit Front Groups

Yesterday, the Georgia Charter School Commission awarded seven charters to various groups, including 4 for-profit schools (two of them are described here). Of course, they're not actually listed as for-profit schools on their applications - they use the same trick as the Imagine folks and set-up non-profit 501(c)(3) organizations (which are rarely denied or investigated by the IRS, as this Stanford report clearly, clearly indicates).

You can add Mosaica Education, Inc and Charter Schools USA to the list of for-profit organizations thriving in the current pro-charter chain climate (they were big to begin with, but hey, there's always room for growth!). Here's a clip from the application of the Heron Bay Academy:

HBA will be governed by an independent, fiscally responsible governing board with a breadth of experience, and will be operated by Mosaica Education, Inc., an educational service provider with 76 school programs in seven states, the District of Columbia, and the Middle East.

Included in HBA's charter application, available here, is a nice little description of Mosaica:

Mosaica Education, Inc. manages 76 public charter school programs, serving 14,000 students in seven states, the District of Columbia, and the Persian Gulf country of Qatar. It was founded in January 1997 by Dr. Dawn Eidelman (currently MEI’s Chief Education Officer and the President of the Paragon Division) and her husband, Gene Eidelman. Michael J. Connelly was named Chief Executive Officer in 1998.

The Company opened its first school in September 1997. Five of the schools it currently manages were acquired by the Company in connection with its acquisition of Advantage Schools, Inc. in August 2001. All other schools were developed by community boards in partnership with MEI as the service provider through start-up initiatives. The Company is privately held and venture-capital funded. Included in its shareholder base are a number of prominent private equity firms, including Murphy & Partners, J.P. Morgan Partners, Credit Suisse First Boston, U.S. Trust, Fidelity Investors and Bessemer Securities. [My bold]

Good to know the Wall Street fools and banksters are getting their grubby little hands on public education funds. Mosaica will also provide the following services for the non-profit charter:

Administrative Services

For the term of the Charter, MEI will provide to the Academy the following administrative services:

Personnel Management. Management and professional development of all personnel providing Educational Services and Administrative Services;

Facility Operation and Maintenance. Operation and maintenance of the charter school’s facility (the “Facility”) to the extent consistent with any and all leases or other documents pertaining to the Facility;

Business Administration. Administration of all business aspects of the charter school;

Transportation and Food Services. Provision of transportation and food services for the students enrolled at the charter school, as required by the Board;

Public Relations. Any and all advertising and public relations with the community and the media;

Budgeting and Financial Reporting.

Maintenance of Financial, Business and Student Records.

Admissions. Implementation of the school’s admission policy;

Student Hearings. Administration and enforcement of student disciplinary and special education;

Semester Reports. MEI will provide to the Board on a semester basis, (or more often if necessary for the Board to satisfy its obligations under the Charter, the Code and other applicable laws and regulations) a report detailing (A) student academic performance, and (B) MEI’s performance on administering Educational Services and Administrative Services;

Rules and Procedures. MEI will enforce the rules, regulations and procedures adopted by the charter school not in direct conflict with the management agreement, the Charter, the Code and other applicable laws and regulations. MEI will recommend rules, regulations and procedures applicable to the charter school and its students; and

Additional Administrative Services. Any other services reasonably necessary or expedient for the effective administration of the charter school.

What's left for HBA to do? Well, their board can rubber-stamp all the decisions made by Mosaica.

If you haven't lost your breakfast yet, here's some info on the the Coweta Charter Academy, the charter to be run by Charter Schools USA. Their final application - which is painful to read partly because it's ENTIRELY IN CAPITAL LETTERS - spells out how Coweta will turn over most operations to CSUSA, which uses a heavy dose of phonics and Open Court materials to "educate" their kids. And, in what looks like a Bakke-lite version of local governance, check out this little gem from their application:

Coweta Charter Academy will have a two-tiered governance structure. The Georgia Charter Educational Foundation, Inc. is the Founding Board and maintains ultimate responsibility for Coweta Charter Academy.

Here's where it gets even more interesting. The connection between the Georgia Charter Educational Foundation and CSUSA isn't entirely clear, but the foundation has a whole bunch of info on their website about CSUSA (it's also quite evident, based on these minutes from the foundation's July 16th, 2009 meeting, that the two groups are mighty friendly with each other). Additionally, the Georgia Charter Educational Foundation, Inc is the actual petitioner for the charter, and their governing board is led by John McIntyre, Jr, the executive director at Morgan Stanley's Atlanta branch. The charter's application makes no qualms about CSUSA's intent to turn a profit:

Contracting with CSUSA is in the best financial interest of the charter school because their compensation philosophy is rooted in school performance. If the school succeeds, then fees are paid. If the school is not successful, then the management company will not make a profit. As defined in the sample management agreement, CSUSA proposes a whole management method for determining fees. This method is more consistent with their comprehensive style of education management and by its nature holds them accountable for performance across all facets of school operations.

Ah, and the rabbit hole gets even deeper when the charter begins talking about their facilities:

The Georgia Charter Educational Foundation, through Red Apple Development, has executed a purchase and sale agreement for a specific parcel of land in the region specified above. Due diligence is currently being conducted on the site and actual closing on the property is contingent upon approval of Coweta Charter Academy’s Start-Up Charter Petition.

Red Apple Development, LLC shares corporate headquarters with...Charter Schools USA! It's also owned by Jonathan Hage, the President and CEO of CSUSA. Before getting into the for-profit education game, Hage was a research assistant working on foreign policy and defense studies for the neocons at the Heritage Foundation, and worked for Foundations for Florida's Future, which was the brainchild of Dubya's little bro, Jeb Bush. I smell something stinky here, don't you?

Stay tuned for more corporate charter school developments and profiteering reports. It's certain to be a wild ride.